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ACCOUNTING CONCEPTS PPT

The document outlines fundamental accounting concepts and assumptions that guide the recording of transactions and preparation of financial statements. Key concepts include the Business Entity Concept, Going Concern Concept, and Matching Concept, among others, which establish the framework for accounting practices. Additionally, it discusses special expenses and incomes, as well as the use of groups and ledgers in Tally ERP.9.

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22 views26 pages

ACCOUNTING CONCEPTS PPT

The document outlines fundamental accounting concepts and assumptions that guide the recording of transactions and preparation of financial statements. Key concepts include the Business Entity Concept, Going Concern Concept, and Matching Concept, among others, which establish the framework for accounting practices. Additionally, it discusses special expenses and incomes, as well as the use of groups and ledgers in Tally ERP.9.

Uploaded by

NIPS WebTech
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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ACCOUNTING

CONCEPTS
 TOPIC WE WILL COVER:

ACCOUNTING CONCEPT
SPECIAL EXPENSES AND INCOMES
GROUPS IN TALLY
LEDGER UNDER GROUPS IN TALLY
ACCOUNTING CONCEPTS/ASSUMPTIONS

 These are the basic rules of accounting within


Which accounting operates.
 They are generally accepted accounting
rules based on which
 transactions are recorded and financial
statements are prepared.
1. BUSINESS ENTITY CONCEPT

According to this concept,


 Business is separate from its owner,
so transaction is always recorded
with business point of view..
 Owner are treated as creditor to the
extent of their capital.
ENTITY
2. GOING CONCERN CONCEPT

 According to this concept, this states that


 Business shall continue for an indefinite period and
there’s no intension to close it or reduce its size.
 Simply , it means that every business entity has
continuity of life. Thus, it will not be dissolved in the
near future.
 This is an important assumption of accounting, as it
provided a basis for showing the value of assets in the
balance sheet.
3. ACCOUNTING PERIOD CONCEPT

According to this concept,


Business should operates inside
a financial year.
 This
is necessary for different
purposes like, calculation of profit,
ascertaining financial position, tax
computation etc.
4. MATCHING CONCEPT:

 According to this concept,


 Match or deduct your expenses against
income to calculate profit.
 If the revenue is more then the expenses, it
is called profit. If the expenses are more
then revenue it is called loss. This is what
exactly has been done by applying the
matching concept.
MONEY MEASUREMENT
5.
CONCEPT
According to this concept,

Transaction is recorded when


there’s involvement of money or
something having money value.
 Identify the concept

 Q1.Under which Accounting concept, quality of


manpower/emotional things(love, blessings, honest is not
recorded in the books of accounts?
 Q2. Which concept assumes that a business enterprise will not
be liquidated/dissolve in the near future?
 Q3. Which accounting concept requires that life of a business be
broken into smaller parts?
 Q4. A business for which financial statements are prepared is
separate and distinct from the owner of the entity.
 Q5. According to which concept, we match or deduct your
business expenses against income to calculate profit..?
6. ACCRUAL CONCEPT
 According to this concept,

 Transactionare recorded in the books of


accounts at the time when it is entered into and
not when the settlement takes place..

 Transaction
is recorded when it has taken place
not when the settlement of cash takes place.
7. COST CONCEPT
 According to this concept,
 Asset is recorded by its cost price not
by sales price.
 It means that fixed assets like building,
plant and machinery, furniture, etc are
recorded in the books of accounts at a
price paid for them.
8. PRUDENCE CONCEPT/CONSERVATISM

According to this concept,

Unexpiredlosses should take &


unexpected profits should leave.
9. DUAL ASPECT CONCEPT

 According to this concept,


 Every transaction had dual effects.
 Dual means double or two.
 1ST IS DEBIT.
 2ND IS CREDIT.

ASSETS = LIABILITIES + CAPITAL


10. MATERIALITY CONCEPT
 According to this concept,
 Transaction is recorded while taking material as a
full
Consideration.
 To make financial statements meaningful, only
material fact i.e. Important and relevant
information should be supplied to the users of
accounting.
 Pen, pencil, rubber, etc
 Stationery account.
11. CONSISTENCY CONCEPT
 According to this concept,
 Accountingpractice once selected and adopted
should be applied consistently year after year.
 This
concept helps in better understanding of
accounting and makes it comparable with
previous years.
12. FULL DISCLOSURE PRINCIPLE

According to this concept,

 There should be complete and


understandable reporting on the
financial statements of all significant
information relating to the economic
affairs of the entity.
Asset • Increase
(DR.)
s • Decrease(CR
(DR.) .)
Liabilitie •Increase (CR.)
s •Decrease (Dr.)
(CR.)
 SPECIAL EXPENSES AND INCOMES :
 OUTSTANDING EXPENSES:
 Those expenses which have become due during the
Accounting period which have not been paid yet.
 It is a liability
 Salary payable, rent payable,etc.
 Journal entry:
Rent due to landlord Rs. 500
Rent(Expenses) A/c dr.
To Rent outstanding A/c
PREPAID EXPS :
 Itrefers to those exps. which have already
paid in advance.
 It is an asset.
 Prepaid rent,prepaid insurance etc.
 Journal entry:
 Paid Rent Rs. 2000 related to the next year
Prepaid rent A/c dr.
To Rent a/c
ACCRUED INCOME :
It is an income which has been earned during the
• Accounting period but not yet received.
• It is an asset.
• Interest due but not received
• Journal Entry:
Accrued income a/c dr
To income a/c

UNEARNED INCOME :
• The income which has been received before it has been earned.
• Not yet earned
• It is a liability.

• Journal entry:
Rent a/c dr.
To Rent received in advance A/c
 GROUPS IN TALLY ERP.9
LEDGERS UNDER
GROUPS IN TALLY
ERP.9
THANK
YOU

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